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How to Make it to the Top in Compliance

May 5, 2016 |efinancial Careers

by Dan Butcher

"I've just been promoted to CCO! The first round's on me!"

Even during a gloomy time for many front-office roles, most banks, asset managers and broker-dealers are still hiring compliance professionals to protect their organization from embarrassing and costly missteps. It is difficult for many financial services firms to find a good, experienced chief compliance officer (CCO) to lead this crucial division.

The skills you need to become a successful compliance officer include intellectual curiosity, the ability to interpret information quickly, attention to detail, good communication skills and strong project management skills.

“It can be very difficult to find people [to fill an open CCO role] who have run a successful compliance program [previously],” said Amy Lynch, the president of FrontLine Compliance, a strategic consultancy. “Since there are not regulatory-mandated guidelines to fill that CCO position, specific educational criteria are not set yet.

“In some cases, people who have those roles still don’t have the best skill set for the position,” she said. “The demand for knowledgeable people in this industry is greater than the supply, which is good news for the job market and people who are looking for those roles.”

2. Get advanced degrees and qualifications

Many CCOs have a law degree, a business degree, a Chartered Financial Analyst (CFA) designation or a Certified Financial Planner (CFP) distinction. There are also newer, emerging compliance credentials, including the FINRA Institute at Wharton’s Certified Regulatory and Compliance Professional (CRCP) program. Some employers will pay for rising compliance stars to get such credentials.

A common misconception in the industry is that you need a law degree, but a basic J.D. typically does not teach securities law – you have to specialize and take elective classes in securities law. Another option is to pursue a Master’s degree that focuses on securities law or incorporates it into a business law or corporate law curriculum.

“A general law degree is not adequate for a financial services compliance position,” Lynch said. “An accounting degree is not necessary, but taking basic accounting courses is not a bad idea, as understanding balance sheets and general ledgers is important, but you wouldn’t have to have a degree in accounting.”

An M.A. or M.S. in finance or an M.B.A. is adequate for aspiring CCOs until there is set criteria to become a financial services compliance officer.

3. Gain various types of on-the-job experience

To reach CCO, you have to have a diversified background and serve in various roles to get a strong appreciation of the various facets of the organization.

“The title is the same, but each firm could be so different in terms of the type of company they are and what the CCO role entails, so it’s hard to lump them together,” said Jack Kelly, managing director of the Compliance Search Group. “In each one you’d have to have different skills and experiences to get to that level – the CCO of hedge fund very different than the CCO of an investment bank.”

Whatever niche you’re in, really know that space and own it.

Former traders and other professionals in non-compliance-related roles have made successful transitions to the compliance team.

“On-the-job experience is great – some of the firms where I’ve done placements of CCOs or chief risk officers, the candidates selected had very specific experience on the trading floor, which demonstrates that they understand the function of their traders and portfolio managers,” said Carol Hartman, executive vice president of recruitment firm DHR International.

Career paths aren’t a straight climb up a ladder anymore.

“Getting to be a CCO, they want someone to do the job with lots of different perspectives, so your career progress up a spiral,” Hartman said. “You have to have substance and be able to explain how you build out programs and demonstrate the thoroughness with which you do things.”

Candidates should mention the compliance programs, processes and procedures they put in place, including the determining factors for success and their ongoing monitoring initiatives.

4. Network effectively, because relationships are key

To succeed in compliance at a bank or asset management firm, you have to build strong relationships with the rest of the business.

“You’re looking to show that you’re proactive, doing things to make yourself more marketable and add value,” Kelly said. “Cultivate not just knowledge but also people skills, interpersonal skills.

“To rise in the ranks, you have to have an understanding how to work well and communicate effectively with businesspeople, senior executives, peers and underlings,” he said. “Work on your holistic skill base and the personal side of who you are in a professional setting so people want to select you, promote you and move you forward.”

5. Be careful what you wish for

The average CCO in the U.S. makes $125,374, while in New York City the average is $148,762, with salary figures ranging from $97k on the low end up to $256k on the high end, according to Glassdoor.

One can certainly argue that CCOs deserve at least that much, and many believe that they’re underpaid, because the job comes with a host of challenges and headaches.

Compliance is one of the few areas that when you reach the pinnacle and become CCO, it’s a dubious distinction.

“You get more money, but not as much as some other C-suite people, and the liability is enormously larger, which is so different than other areas [of a financial services organization],” Kelly said. “CEO pay packages are enormous, and even as the CFO or COO you can make so much money that it’s ridiculous, and the risk is low, because if you screw up you get a golden parachute.

“You won’t make as much as a CCO, but God forbid something happens, you may never work again,” he said. “There’s so much more risk and downside.”